Long-term holders marginally trimmed their bitcoin positions in recent weeks despite a sharp price drop, data from analytics firm Glassnode show.
The leading cryptocurrency by market capitalization failed to break the $52,000 level on Monday and slipped to $49,300 in European trading hours on Tuesday.
Bitcoin prices have fallen almost $20,000 since November 2021′s highs of over $69,000. However, analytics show the supply held by investors has only dropped to 13.3 million BTC from 13.4 million BTC – a marginal change considering the massive price drop.
The absorption of bitcoin from sellers could be bullish.
“Such on-chain behavior is more typically observed during bitcoin bear markets, which in hindsight are effectively lengthy periods of coin redistribution from weaker hands, to those with stronger, and longer-term conviction,” explained Glassnode in a Monday newsletter.
Glassnode categorizes long-term holders as wallet addresses holding bitcoin greater than a 155-day period – a time frame beyond which holders are statistically less likely to spend their bitcoins.
The recent reduction in long-term holdings looks like a rounding error compared with what investors added in 2021. Data shows long-term holders have added 1.8 million bitcoin to their accounts since January while short-term supply declined by 1.4 million bitcoin in the same period.
Some long-term holders haven’t touched their bitcoin in over five years, with over 23% of bitcoin’s 21 million supply remaining untouched in the period, as per other metrics tracked by Glassnode.
— glassnode alerts (@glassnodealerts) December 28, 2021
Meanwhile, the Relative Strength Index (RSI), a price-chart indicator, for bitcoin slid to favorable levels in European trading hours on Tuesday after reaching overbought conditions last Friday. The tool calculates market momentum for assets, and an overbought level implies prices are overvalued and may be primed for a trend reversal or corrective price pullback.
RSI readings for bitcoin hovered at 40 on Tuesday after reaching an overbought level of over 72 on Friday, when prices touched $51,000. Bitcoin rests at a $49,300 support level at press time, one it failed to break thrice in December 2021.